Maryland Investment Fraud Scheme Targeted Vulnerable Investors

by Wall Street Fraud on September 21, 2011

Investment fraud attorneyThe U.S. Attorney's Office for Maryland has announced that 52-year-old financial advisor Ralph Edward Thomas Jr. pleaded guilty to mail fraud in connection with an investment fraud that bilked "vulnerable" clients of $838,350.

According to prosecutors, the fraud began with a trust account was established in 1994 for the benefit of a child suffering from cerebral palsy. The trust account was funded by the proceeds of a $3 million medical malpractice settlement, which were used to buy an annuity. The annuity was supposed to pay the child a minimum of $3,990 a month.

Thomas was a vice president of Harbor Financial Services, a subsidiary of Harbor Bank. After meeting the child’s mother, also the trustee, at Harbor Bank in December 2001, he established complete control over the child’s trust account, which was moved to the Harbor Bank.

From December 17, 2001 through June 30, 2010, the period of Thomas’ fraud scheme, the annuity payments were deposited directly into the trust account.  Although the annuity payments averaged $6,287.53 per month, Thomas disbursed only $1,000 to $1,500 a month from the trust account to the mother for the care of the child.

He withdrew the remaining monthly balance by obtaining the mother’s signature on blank withdrawal slips, and deposited the funds into his personal bank accounts. Over the course of the fraud scheme, Thomas withdrew $756,963.98 from the trust account. He even purchased a home in Reisterstown, Maryland on July 30, 2009 using $100,000 of the stolen funds.

According to prosecutors, this was not the only investment fraud the financial advisor perpetrated. From February 2004 through July 2010, Thomas was employed as a financial advisor by Wells Fargo Advisors, LLC. While working an advisor, Thomas admits that he fraudulently withdrew $75,000 from an account held by an elderly Wells Fargo customer. Of the $75,000 withdrawn, $42,000 was used to pay Thomas’ personal credit card accounts or other personal benefits.

As part of his plea agreement, Thomas has agreed to pay $838,350.34 in restitution, the total amount of loss resulting from the frauds above, and to forfeit property in order to pay such amount, including funds held in investment accounts owned by Thomas, his home in Reisterstown, and luxury automobiles.

Thomas also faces a maximum sentence of 20 years in prison and a $250,000 fine for mail fraud. He is scheduled to be sentenced on February 3, 2011.

Source: Baltimore Sun

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